What is a Gold Loan in India? What Are The Major Benefits?

ByLily A Singh

Want to get a loan without proving your income but one against an asset that you already own? Go for a loan against gold. Choose the best bank for a gold loan that keeps your asset completely safe by shifting it to vaults with high security for constant surveillance and protection.

What is a Gold Loan?

It’s a loan given to you by a lender by pledging your gold assets (usually 18-24 carats) as collateral. The loan amount you receive is a specific percentage of the gold, as per its quality and current market value.

Major Benefits of Taking a Gold Loan

End-use freedom

You can use a loan taken against gold to finance a variety of requirements, including but not limited to:

  • A medical emergency
  • Your child’s wedding
  • An urgent need for cash for your business
  • Agricultural investment
  • Down payment of your vehicle

Simple eligibility

Unlike other types of loans, you need not have a good CIBIK score or even an income to qualify for a loan against gold. Just ensure to meet these basic criteria as a borrower:

  • You must be an Indian resident, at least 25 years old.
  • You must own the gold jewellery that you deposit.
  • By the time the loan matures, your age shouldn’t have crossed 70. This requirement allows you to enjoy the golden years of your life without financial stress.

Minimal documentation

Since you need not prove your income to secure a loan against gold, no hassle of preparing any income proof documents for loan application. Simply submit some basic documents, such as:

  • KYC Documents (your identity and address proofs)
  • Your photograph
  • Your PAN number/ Form 60
  • A blank cancelled cheque

Check the required gold loan documents online or gold loan calculator on the official website of the chosen lending bank.

Various easy repayment options

The best gold loan is available with multiple simple repayment options, which often include:

  • Prepayments at any time during the loan tenure without any applicable charges
  • Monthly repayment through equated monthly instalments (EMIs)
  • Bullet repayment, that is, payment in full at the end of the tenure

Opt for the most convenient repayment option to close the loan hassle-free. You can even repay the gold loan through online fund transfers. Always, consider using the online EMI calculator on the bank’s website to check the auto-calculated instalment amounts and pay them accurately on time.

Quick loan disbursal

The best bank for a gold loan approves it in just a few hours to help you finance your urgent cash requirements without delay. The experts will determine the value of your gold deposit in your presence. After that, the sales team would go through your application then and there to give you the loan.

You can enjoy various other benefits of a loan against gold if choose a good lending bank. For instance, you can get a loan amount between ₹10,000 and ₹10 crores for all sorts of financial needs, and get access to non-jumping interest rates so that the EMI amount remains fixed. So, ensure to choose the best lending bank.